First, let’s ask ourselves what is the FOREX market?
The FOREX market is a market in which currencies are traded worldwide. The market is unique in that it is traded around the clock and therefore, no matter where you are in the world, you can access it and trade it. The market is very dynamic, constantly moving up and down as people buy and sell different currencies. The market is run by brokers who are market makers; they follow your buying and selling instructions and create liquidity in the market.
How can you make a profitable trade?
The most effective way to make money in the FOREX market is through a combination of different tools and indicators that give you the same forecast at the same time. When you have a combination of these indicators, then you are ready to trade. At this stage, however, you need to monitor the price action and make sure it goes in the intended direction. Then you do your trading!
At any given moment, the market is either consolidating or on trend. Markets consolidate when traders cannot decide which way the market will go. Consolidations are like coil springs that store energy. When they are finally released, they can lead to a big move in both directions.
There are different trading strategies that can be used to take advantage of both types of markets or simultaneously. Somehow FOREX trading is very scientific and different indicators can give you an increased chance of success.
A trend begins when most traders believe that one currency is more or less valuable than another. For example, if everyone thinks that the euro is more valuable than the US dollar, then EURUSD will rise, and conversely, if they think that the euro is less valuable than EURUSD, the value will fall.
The indicators will be used to detect a reversal of the price, which will signal the beginning of the trend, then help to confirm the trend and finally to see the trend complete.
The same will happen with consolidations. When multiple indicators tell you the same thing, the price will turn. Now the new move will probably be very short as you are in consolidation, but you can take pips regularly as the price moves.
Nothing is perfect in the world of trade and there is no security in every trade. Therefore, you have to accept that every deal you make will lose money. When you do this, you will always protect yourself. This is indeed a state of mind and behavior that is crucial to trade. Protecting your money is more important than making it. If you protect yourself, then you will minimize your losses and then let the profits flow.
The FOREX market is the largest market in the world and tends to make big moves in both directions, especially after the consolidation phase. You can use indicators to predict what will happen next. The more indicators that tell you the same thing at once, the better. Always beware of any trade, as nothing is 100% reliable in trading.
If you follow these rules, you will earn money in FOREX.